02 Aug Rocky Brands’ Q2 Profits Soar
Rocky Brands Inc. reported profits in the second quarter jumped 73.3 percent, thanks to high-single-digit growth in wholesale sales and expanding gross margins. Second quarter net sales were $58.2 million compared to $58.5 million in the second quarter of 2017. The company reported second quarter net income of $2.6 million, or 35 cents per diluted share, compared to a net income of $1.5 million, or 20 cents in the second quarter of 2017.
Net sales were $119.6 million and $121.5 million for the six months ended June 30, 2018 and 2017, respectively. The company reported net income of $5.9 million, or $0.79 per diluted share, and a net income of $3.0 million, or $0.40 per diluted share for the six months ended June 30, 2018 and 2017, respectively.
Jason Brooks, president and chief executive officer, commented, “We had an excellent second quarter highlighted by high-single digit growth in wholesale sales combined with continued strength in our retail division. Our focus on introducing innovative new products into the marketplace, supporting our retail partners with great service and enhancing our use of digital advertising is driving increased direct sales of Georgia Boot, Durango and Rocky’s current offerings at higher gross margins. At the same time, our internal manufacturing capabilities are providing us with a great opportunity to expand our commercial military operations both in the U.S. and overseas. We are also encouraged with the ongoing success of Lehigh, our differentiated direct business-to-business model, which continues to grow through key account wins and increased participation and retention with existing accounts. Looking ahead, I’m confident that we have the right strategies and people in place to build on our recent accomplishments and deliver improved profitability and greater shareholder value for years to come.”
Second Quarter Review
Net sales for the second quarter decreased 0.4 percent to $58.2 million compared to $58.5 million a year ago. Wholesale sales for the second quarter increased 7.3 percent to $39.8 million compared to $37.1 million for the same period in 2017. Retail sales for the second quarter increased 6.7 percent to $11.7 million compared to $11.0 million for the same period last year. Military segment sales for the second quarter were $6.7 million compared to $10.3 million in the second quarter of 2017.Gross margin in the second quarter of 2018 increased to $19.5 million, or 33.6 percent of sales, compared to $18.2 million, or 31.1 percent of sales, for the same period last year. The 250 basis point increase was driven by higher wholesale and retail margins combined with a lower percentage of military sales, which carry lower gross margins than wholesale and retail sales.Operating expenses were $16.2 million, or 27.8 percent of net sales, for the second quarter of 2018 compared to $15.9 million, or 27.2 percent of net sales, a year ago.
Income from operations for the second quarter of 2018 was $3.4 million, or 5.8 percent of net sales, compared to $2.3 million for the same period a year ago, or 3.9 percent of net sales.
Inventory at June 30, 2018 decreased 4.8 percent to $72.6 million compared to $76.3 million on the same date a year ago.
Rocky Brands makes footwear and apparel under a portfolio of brand names including Rocky, Georgia Boot, Durango, Lehigh and the licensed brand Michelin.